Justices Take Up Funding of Campaigns

A deeply divided Supreme Court, returning early from its summer recess, on Monday took up the debate over whether Congress can limit the impact of big money in politics without abridging freedom of speech.

The justices met for a rare, four-hour argument on the Bipartisan Campaign Reform Act, known as the McCain-Feingold law, which Congress passed last year to close loopholes in the federal election law.

With lawmakers looking on and some of the most prominent names in law making arguments, the session brought together unlikely allies on both sides of the issue. It was the first time the court weighed the issue since the Watergate era, marking a once-in-a-generation constitutional battle on election law.

The court met early because it hoped to decide the case soon, at least before the start of the 2004 election year.

But the justices sounded sharply divided Monday. The four conservative justices took turns critiquing the notion that politics and campaign ads can be regulated.

Justice Antonin Scalia recited the words of the 1st Amendment: “Congress shall make no law ... abridging the freedom of speech.” Because the money buys political ads, it limits speech about politics, Scalia said. He and Justice Clarence Thomas maintain that all of the campaign money limits violate the 1st Amendment.

Chief Justice William H. Rehnquist and Justice Anthony M. Kennedy have been skeptical of limiting money flowing to the political parties.

The McCain-Feingold law forbids the parties to ask for or to accept money from corporations or unions as well as from wealthy people who can give more than the $25,000-a-year limit.

In the 2000 election year, the parties took in and spent more than $500 million of this so-called soft money, even though federal law bars corporations and unions from funding campaigns. The tobacco and casino industries, pharmaceutical giants and organized labor were leading contributors, and their money gave them unusual influence in Washington, according to the law’s sponsors.

The four liberal justices spoke up to defend these new limits as a reasonable way to prevent politics from being dominated by big-money interests.

If corporations and the wealthy can funnel huge donations through the parties, “you are allowing a complete end-run around the law,” said Justice David H. Souter.

Attorney Seth Waxman, who represented Sens. John McCain (R-Ariz.) and Russell D. Feingold (D-Wis.), the chief sponsors of the law, said it was crucial for maintaining the public’s faith in a democracy. Voters must have confidence that “their vote counts, and that big money doesn’t call the tune,” Waxman told the court.

Since 1907, Congress has barred corporations from funding candidates for federal office. A similar ban on unions was adopted in 1947. Amid the Watergate scandal that drove President Nixon from office, Congress also put limits on how much individuals could contribute to candidates and parties.

Individuals were allowed to donate up to $1,000 to a candidate for Congress and $20,000 to a party. The McCain-Feingold measure raised these limits to $2,000 for federal candidates and $25,000 for parties.

Justice John Paul Stevens, a defender of the limits, pointed out that the court had repeatedly upheld the limits on corporate funding. At one point, he asked the lawyer for the Republican National Committee whether it was unconstitutional to forbid “profit-making corporations” to give money to the parties.

Yes, replied Bobby R. Burchfield.

“That’s the heart of your position, and it’s unsupported by” the court’s precedents, Stevens replied.

Justices Stephen G. Breyer and Ruth Bader Ginsburg stressed that the law does not “ban speech” by political parties.

“It would cut out corporate funding, union funding and funding from wealthy individuals,” Ginsburg said. Parties would remain free to say and do as they choose, as long as they rely on money raised under the legal limits, she said.

Justice Sandra Day O’Connor, who is likely to cast the deciding vote, was uncharacteristically silent through the argument. Although she gave little clue Monday to her views, she has joined the court’s liberal faction in recent decisions that upheld the monetary limits in state and federal election laws.

In 1975, the high court took up the challenges to the sweeping campaign reform laws that followed Watergate. The justices handed down a compromise ruling in Buckley vs. Valeo. The court upheld the limits on contributions to candidates and parties but struck down the spending limits.

This split result led to problems. If parties were able to obtain money, they had a right to spend it. And federal regulators in the 1980s said parties could raise money for activities that did amount to funding a candidate.

By the mid-1990s, this tiny opening led to a gusher of money flowing into the parties. They in turn used it to fund “issue ads” that, for example, touted the record of President Clinton or the personal character of former Kansas Sen. Bob Dole, the 1996 Republican candidate for president.

“Concentrated wealth is nothing if not creative in exploitation of loopholes,” U.S. Solicitor General Theodore B. Olson told the court.

The loophole that allowed corporate and union money to flow to the parties may have started small, but it led to “the relentless pursuit of big contributions,” he said.

Olson, a Bush appointee, was joined by Waxman, a Clinton administration veteran, in urging the court to uphold the ban as written in the new law.

Lawyers for Sen. Mitch McConnell (R-Ky.), the Republican National Committee and the California Democratic Party urged the justices to strike down the ban.

It “intrudes deeply into the political life of the nation” and prohibits “activity that lies at the very core of the 1st Amendment,” said Kenneth W. Starr, the former independent counsel who recommended the impeachment of President Clinton and who is representing McConnell.

While the morning session focused on the parties and soft money, the court turned its attention to campaign ads in the afternoon.

Since 1975, the law has limited spending for broadcast ads that say “Vote for Smith” to “Defeat Jones.”

However, few ads use these words. And until last year, television spots that did not include such “express advocacy” were deemed to be “issue ads.” As a result, corporations and unions could secretly fund broadcast ads that derided a candidate for Congress.

The McCain-Feingold law says a television ad broadcast within 60 days of the election and that mentions a candidate is an “electioneering communication” subject to the fund-raising limits.

Floyd Abrams, a 1st Amendment expert, said this provision should be struck down.

“I don’t concede there is anything beyond express advocacy” that can be regulated, he told the justices.

“If we strike this down, we should forget the whole statute, or pretty close to it,” interjected Justice Breyer. If corporations can spend millions on secret ads, why have a limit on corporate funding of federal campaigns, he asked.

“It seems to me this distinction [between express advocacy and issue ads] is meaningless, just silly,” said Justice Kennedy. “Why don’t we just junk it?” He did not say, however, what he would put in its place.

Waxman said Congress saw an obvious loophole and closed it. The sham issue ads that filled the airwaves during election season “made the law an object of scorn. They were aiming at voters, and they were electioneering in every sense of the word,” he said.

He offered as an example the pharmaceutical industry and its record in the last election cycle. Before September 2000, drug makers paid for more than 23,000 broadcast ads that discussed issues but did not mention candidates.

In the two months before the election, the pharmaceutical firms paid for 10,000 more ads, and all of them referred to a candidate, Waxman said.

This shows that the corporate officials were seeking to sway voters for or against a candidate and not just sway their views on an issue, he said.

McCain and Feingold were in the front row of the spectators’ section, along with the other congressional sponsors of the law. At the other end sat McConnell, its leading foe.